In a move to save money and improve the quality of services provided to the public, many cities are looking to privatize assets they have maintained and operated for decades. Whether it’s privatizing street repairs, vehicle towing, highway toll roads, or even airports, these assets are being sold off or leased to the private sector for billions. Next up…parking meters.

On December 5th, 2008, the City of Chicago privatized its city supply of parking meters. Awarded to Morgan Stanley and its partner LAZ Parking for the hefty sum of $1.15 billion, rates and tickets, previously managed by the city will now be controlled by private parties. (Just 2 years before these 2 companies partnered to purchase the 99-year lease to the city’s (and world’s) largest underground parking structure for $563 million.) With rates scheduled to skyrocket starting in 2009, downtown motorists will be expected to pay $3.50/hr starting January 1st, up 17% and scheduled to rise to $6.50 an hour by 2013.

From the city’s view, this makes economic sense and really, who can blame them? With news of cities filing for bankruptcy, city officials must look to shore up their jurisdiction’s finances as 2009 approaches. But is the move shortsighted? Are cities going too far in “outsourcing” their assets for a quick buck?

While advocates are quick to point out that outsourcing also is sought for performance improvement, as well as minimizing unnecessary liabilities, opponents site long-term impacts that can affect a city. In August of this year, Oak Park, a suburb of Chicago, doubled its parking meter rates. Soon after, local merchants began losing business and residents cried foul as business began to pour out of the village. A few weeks later, officials decided to go back in time and reverse the hike.

Personally, I see the pros and cons of privatization. I am a bit weary of privatizing certain city assets and am skeptical if Chicago’s decision to privatize parking in particular will work. Hopefully for the city’s long-term viability (and other cities that look to emulate its decision), it will have a positive impact. One thing is for sure, though - change is coming…and most likely to a city near you.

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